Income Tax Department Direct tax Code: How it affects you

Finance Ministry on released a revised Income Tax Direct Taxes Code (DTC). New tax code is meant to create an efficient direct Income tax system by replacing archaic IT Act. Direct Taxes Code Bill was introduced in Lok Sabha in 2010 and was later referred to the Standing Committee on Finance. Draft tax code proposes a new income tax rate of 35 per cent for individual’s income is greater than Rs.10,00,00,000. Standing Committee on Finance headed by senior BJP leader Yashwant Sinha had proposed no tax on Rs. 3 lakh per annum income; 10 % of 3, 00, 000 to Rs. 10, 00, 000; 20% on Rs. 10 lakh to Rs. 20 lakh and 30 % on annual income beyond of 20 lakh. The draft Direct Income Taxes Code - 2013 proposes to reduce the age for tax exemption for senior citizens to 60 years from 65 years. New draft Income tax code widens the base for levy on other tax like wealth tax. Revised code captures all assets example, wealth tax whether a physical or financial, removing distinction between physical and financial asset. Wealth tax is to be proposed to be levied on individuals, Hindu Undivided Family (HUF) and private discretionary trusts at the rate of 0.25 per cent. Threshold for levy of wealth tax in the case of individual and Hindu Undivided Family shall be 50 crore. According to tax norms, every individual and HUF who has wealth exceeding 30 lakh is required to pay wealth tax at tax rate of 1 per cent. With a view to provide parity in treatment of insurance products and mutual fund , new Direct Tax Code propose to levy a income distribution tax on equity linked insurance products on the lines of equity oriented mutual funds. The new tax code proposes additional tax @10 per cent on recipient of dividend (liable to dividend distribution tax) exceeding 1 crore. Under Income tax act, dividend distribution tax will be levied at the rate of 15 per cent. As per the provisions of 'Income from house property' shall not apply to a house property or any part of the house property which is used for business or commercial purposes. The new tax code says the amount of rent received in arrears or the amount of rent which is not realised from a tenant and is realised subsequently shall be deemed to be the income from house property of the financial year in which such rent is received or realised. For the purposes of deduction in respect of interest on loan taken for self-occupied house property, loan given by the employer should also qualify for this concession. To provide smooth transition from Income Tax Act to Direct Taxes Code, the new tax code says provisions will be made for treatment of losses remaining to be carried forward and set off as per the provisions of the existing Income-tax Act on the date on which DTC comes into effect Keywords - Income Tax, income tax return, income tax rates, income tax login, income tax calculator, income tax slab, income tax deductions, income tax act, income tax act 1961